\u3000\u3 Bohai Water Industry Co.Ltd(000605) 003 Zhongwang Fabric Co.Ltd(605003) )
In 2022q1, the income was 152 million yuan, an increase of 7.6%, and the net profit attributable to the parent in 22q1 was 38 million yuan, a decrease of 9.1%. The company released the results of 2021 and 22q1, with a revenue of 587 million yuan in 2021, an increase of 18.5%, mainly due to the growth of sales volume. Among them, the revenue and growth rate of 21q1-4 were 141 million (+ 36.4%), 135 million (+ 49.8%), 138 million (- 8.8%) and 172 million (+ 14.7%) respectively.
In 2021, the net profit attributable to the parent company was 147 million yuan, an increase of 4.8%, of which the net profit attributable to the parent company and the growth rate of 21q1-4 were 42 million (+ 50.0%), 34 million (+ 19.5%), 33 million (- 16.7%) and 38 million (- 14.2%) respectively. The company’s profit distribution plan for 2021 is to distribute cash dividends of 4.1 yuan (including tax) to all shareholders for every 10 shares, with a total cash dividend of 45.1 million yuan (including tax), accounting for 30.6% of the net profit attributable to the parent company. The sales volume of decorative fabrics increased by -202188% year-on-year, accounting for -2.01% of the total revenue of 2023.5%; The income of sofa covers was 59 million yuan (accounting for 10.1% of the total, with a year-on-year increase of + 0.4pct), with a same increase of 23.4%, and the sales volume reached 187500 sets, with a same increase of 16.4%; Other income was 04 million yuan (accounting for 0.6% of the total, basically the same year-on-year), an increase of 27.5%.
By region, China’s revenue in 2021 was 96 million yuan (accounting for 16.4% of the total, with a year-on-year decrease of – 3.3 PCT), a decrease of 1.2%; The revenue of the United States region was 193 million yuan (accounting for 32.9% of the total, year-on-year + 0.1pct), an increase of 18.8% at the same time; Vietnam’s revenue was 255 million yuan (43.4% of the total, year-on-year + 0.9pct), an increase of 20.9% at the same time; The income of other countries was 39 million yuan (accounting for 6.6% of the total, with a year-on-year increase of + 2.5pct), an increase of 89.3%.
The gross profit margin in 2021 was 36.8%, with a decrease of 5.1pct, mainly due to the continuous rise in the prices of the company’s main raw materials POY and DTY in 2021 and the increase in sea freight, which put great pressure on the cost side; 22q1 gross profit margin 37.5%, with a decrease of 1.0pct.
By product, the gross profit margin of decorative fabrics is 39.3%, with a decrease of 4.4pct; The gross profit margin of sofa cover is 17.2%, with a decrease of 12.6pct. By region, China’s gross profit margin was 44.6%, with a decrease of 5.1pct; The gross profit margin in the United States was 36.1%, with a decrease of 13.4pct; Vietnam’s gross profit margin was 35.6%, an increase of 2.7pct. In 2021, the company’s sales / management / R & D / financial expense rates were 2.7% (- 0.2pct), 4.3% (- 0.3pct), 3.4% (- 0.1pct) and – 0.6% (- 1.4pct) respectively. The change of financial expense was mainly due to the increase of financial interest income and the decrease of exchange loss. Among the R & D expenses, the proportion of design expenses in 20-21 years is 42.7% and 39.3% respectively. In the future, the company plans to continue to increase investment in the design field.
The net interest rate attributable to the parent company is 25.1%, with a decrease of 3.3pct. 22q1 net interest rate attributable to parent company is 25.1%, with a decrease of 4.6pct. In 2021, under the impact of the epidemic on orders and production, insufficient transportation capacity, significant increase in costs, exchange rate fluctuations and other adverse factors, the company’s performance still achieved good growth. At the same time, it added Mexican market business and printing business to create new profit growth points. In the future, the company plans to continue to gradually expand the production scale and market share of decorative fabrics, increase investment in design and R & D, deepen cooperation with customers and improve profitability. Specifically, in terms of production capacity, by the end of 2021, the cumulative investment of the company’s raised investment projects was 427 million yuan, which has exceeded 85% of the total project investment, including the “project with an annual output of 15 million meters of high-grade decorative fabrics”, which has entered the equipment commissioning stage by the end of 2021 and is expected to be put into operation by the end of June 22; At the same time, the company will gradually turn the products with intellectual property rights and copyrights in outsourcing into independent production, and reduce the proportion of weaving outsourcing from about 30% to 10% ~ 15%. With the increase of orders from original customers, the increase of new customers, the expansion of new categories and new markets and the recovery of most outsourcing, the production capacity of the company’s raised investment projects is expected to be released as soon as possible.
In terms of products, the company will continue to improve its design and R & D capabilities, send relevant personnel to learn about international trends and needs, cooperate with world-famous painting companies or studios, pay attention to the research in the field of material and yarn development and processing technology, and apply for patents to protect property rights. At the same time, the company will also increase the R & D and promotion of outdoor fabric “sunbelievable”, functional fabric “neverfear” and environmental protection fabric “z-cycle”, so as to improve the added value of products.
In terms of market, the company will continue to dig deep into the American market and strengthen the development of high value-added customers on the basis of maintaining existing Ashley, La-Z-Boy and other well-known customers; At the same time, further expand the sales in Mexico, the Middle East, Europe and China (such as Gu Jia, Meike Meijia, etc.) and expand the sales scale.
Adjust the profit forecast and maintain the buy rating. The company’s short-term performance is under pressure due to the high freight and raw material prices. However, considering the gradual release of the company’s raised investment project capacity, strong bargaining power, stable delivery time and high-quality service, it is expected to further expand high-quality new customers and deepen the cooperative relationship with old customers in the future. We expect the company’s EPS in 202224 to be 1.70, 2.16 and 2.67 yuan / share respectively (the original values in 22-23 are 2.31 and 2.91 yuan / share respectively), The corresponding P / E were 12.13, 9.57 and 7.71 times, respectively.
Risk warning: shipping costs continue to rise; The cost of raw materials continues to rise; Customer orders grew less than expected; Risks such as lower than expected capacity release.
